State of the Market

[sreed]

I think we are in the process of a fairly major adjustment in the IT contracting industry. Once the City decided that inside IR35 was the way to go then the argument for remaining a contractor was weakened, although there is seemingly still enough contractors willing to do it.

Also the days of floors full of contractors delivering projects seems to have passed. They seem to be well and truly offshored.

This is an observation based on who I have worked with over recent years and not a political or social one, but we have had a lot of IT talent come in from India. I suspect the change in immigration rules will reduce that but they are now able to stay permanently and are competing with the rest of us.

That all said the work I have got post Covid reminds me of what I got 15 years ago where you went into a small or medium setup either on your own or in a small group and used your expertise to help them over a few months before moving on.

I probably don’t have as much contracting experience as you, given that I’ve never been pure IT and moved from operations permie to consulting outside to now a generalist PM contractor (mostly inside post covid) over a 20 year period, but there is definitely a trend over the time I have been in the market that matches what you’ve said.

I don’t believe that there will be a significant let up in experienced IT people moving here from India, there continue to be too many low effort visa routes and an inexhaustible (compared to the UK job market) high volume of highly incentivised people looking to permanently immigrate.

IR35 and a move towards inside roles is here to stay. To me personally, it’s all a means to an end and since I’ve started sal sacrificing large proportions and the allowance has gone up to 60k, I’m increasingly fine with inside contracts as monetarily it works out about even compared to if I earned a similar day rate on an outside contract. Obviously that wouldn’t be the case for every single contractor out there but it will for a large number of one man bands and especially those who started contracting fairly recently so aren’t comparing it to the era that was.

[edison]

I've seen and heard some conflicting things in the last two weeks. Multiple recruiter sources have told me that companies may have plans but there isn't the same appetite any more for kicking off transformation programmes or large projects. M&A and PE activity is down and there's no big business driver to start kicking off major change for many companies.

On the plus side, I have seen quite a lot of new contract and perm PMO roles advertised which is normally a sign that better things are on the way. I just think programmes and projects will be on a smaller scale than before and there will be fewer opportunities overall for some time to come.

[SussexSeagull]

I think we are in the process of a fairly major adjustment in the IT contracting industry. Once the City decided that inside IR35 was the way to go then the argument for remaining a contractor was weakened, although there is seemingly still enough contractors willing to do it.

Also the days of floors full of contractors delivering projects seems to have passed. They seem to be well and truly offshored.

This is an observation based on who I have worked with over recent years and not a political or social one, but we have had a lot of IT talent come in from India. I suspect the change in immigration rules will reduce that but they are now able to stay permanently and are competing with the rest of us.

That all said the work I have got post Covid reminds me of what I got 15 years ago where you went into a small or medium setup either on your own or in a small group and used your expertise to help them over a few months before moving on.

[northernladuk]

Lady reckons IR35 changes means an extra 90,000 people now competing for perm jobs

https://www.linkedin.com/posts/nadin...member_desktop

Must admit I'm not keen on that article. Dunno why Amazon not paying tax is relevant or the argument IR35 affects the perms as she's put it but her end message seems welcome.

[tsmith]

Lady reckons IR35 changes means an extra 90,000 people now competing for perm jobs

https://www.linkedin.com/posts/nadin...member_desktop

[Fraidycat]

I would guess Minimum wage rises effecting other job salaries is going be like some sort of inverse square law.

Nearby rates are going to effected most, but the effect is going to diminish the further away you get from £11.50 an hour.

[sreed]

Every article I read about rising min wage said that it will cause overall wages to grow as well as suddenly people on lower wages realise they earn minimum wage and so want a raise. Min wage only kicked in beginning of April, so surely it's too quick to be saying that it doesn't affect overall wage growth?

I have no idea about all this works. The way I see it, non-statutorily-required wage growth can only happen if there’s the money to fund it so if companies aren’t doing well, or aren’t investing, I don’t know where the money will come from for salary hikes. Doesn’t apply in the same way to the public sector but even they don’t have the money and in any case that happens in a slow manner as it involves unions, government, etc.

[dsc]

[...]rapidly slowing wage growth outside of the minimum wage increase (self inflicted inflation).[...]

Every article I read about rising min wage said that it will cause overall wages to grow as well as suddenly people on lower wages realise they earn minimum wage and so want a raise. Min wage only kicked in beginning of April, so surely it's too quick to be saying that it doesn't affect overall wage growth?

[sreed]

Just to be clear, as I mentioned in my post, the comment you’ve quoted (Megan is wrong) isn’t mine, it’s a comment under the FT article

The Swiss central bank cut rates by 0.25% (from 1.75% to 1.5%) a few weeks ago, so you never know!
https://www.reuters.com/markets/rate...ng%20inflation.

Its not just Megan, the City now expects just 2 cuts totalling just 0.5% this year for the UK, from the FT:

[Fraidycat]

It should be clear by now that I think Megan is completely and utterly wrong, borderline crazy. The U.K. is not the US, for sure. We have lower growth, lower consumption, lower disposable income thanks to structurally higher energy prices, no housing bubble, no stock market bubble,.

Its not just Megan, the City now expects just 2 cuts totalling just 0.5% this year for the UK, from the FT:

"City Traders are no longer fully pricing in the first UK interest rate cut in August and now expect borrowing costs to begin to fall in either that month or September. The two cuts they now expect for this year contrast with the more than six cuts markets anticipated in January. On Thursday the interest rate swaps market fully priced in a cumulative cut by year end of around 0.5 percentage points. Market expectations have shifted in similar fashion in the US and the eurozone

UK consumer price inflation fell to 3.4 per cent in February, its lowest level since 2021, and big declines in household energy bills will drag it down further in the near term. But the BoE’s latest forecasts suggest this drop will be temporary, with domestic price pressures pushing headline CPI back above the central bank’s 2 per cent target for much of the next two to three years"


Plus crude oil is currently $90 and will go over $100 if the tulipe hits the fan in the middle east.

Six rate cuts would have kick started the contract market for sure this year, as clients would have green lit projects that are currently on hold.